Cloud computing is indeed catching on in Supply Chain Management (SCM) circles, and for many of the same reasons it’s become so popular in other enterprise domains. The cloud connects not just people, but sometimes numerous organizations using disparate information systems. This connectivity fosters collaboration, which in supply chain terms can mean interdepartmental integration, and even vertical integration between suppliers, producers, and buyers. Whether used internally, externally or both, tighter integration improves the awareness and responsiveness of supply chain actors, and lifts the value of supply chains as a whole.
Let’s explore a few ways that cloud applications can benefit your organization and supply chain. We mentioned real-time connectivity, but there is also lower operating cost, less reliance on IT, greater contract flexibility, zero upfront outlay, faster time to value, and the SaaS model’s built-in incentive for cloud vendors to continually earn client loyalty.
On-Premises to Nebulous
For supply chain organizations, making the decision to replace desktop spreadsheets and on-premises management systems with cloud benefits computing is a huge step. It requires serious considerations about cost savings, data security, the repositioning of IT’s role, and the ability of existing ERP systems to integrate well with cloud benefits planning applications.
That said, these hosted, pay-as-you-go platforms have come a long way and are making an ever-stronger case for supply chains to migrate to the cloud benefits. To do so would be to follow in the footsteps of CRM leaders, HR departments, and other early adopters.
So, cloud adoption is no longer just a low-cost alternative for small and medium businesses. Cloud ERP systems and best-of-breed cloud applications can sync seamlessly, enabling robust computing in a continually and automatically updated virtual work environment. This brings even greater value to large and diverse workforces, some of which are spread across multiple work centers, IT environments, and countries.
Basic Cloud Benefits
- Automated communications between internal and external stakeholders
- Stronger shared risk management
- Better mobile computing access — anywhere, any device
- Increased data storage
- No upfront costs associated with buying software or building it in house
- Lower operational and maintenance expenses
- Fast and easy delivery, especially for organizations with globally distributed work centers
So, cloud SaaS applications are flexible, adaptable, scalable, and, by some measures, more affordable than traditionally purchased or deployed solutions. Also, customization and upgrades are comparatively fast and easy, which brings us to cost-effectiveness.
Time and Cost Savings
PWC research shows that cloud-based system costs can be 50-60 percent lower than on-premise solutions over a 10-year period. From what we’ve observed in recent years, cloud deployments have far shorter implementation time frames that hosted or on-premises solutions:
- On-premise systems: 12-36 months
- Hosted systems: 9-18 months
- Cloud-based systems: 4-8 months
Additionally, when you subscribe to a cloud benefits Software as a Service, you don’t need on-premises storage or IT support to maintain your software. You may even reduce system hardware requirements.
Working with Cloud Vendors
As more organizations plug into cloud-benefits systems, cloud vendors are competing more aggressively with stronger incentives, such as contract flexibility. Keep in mind that cloud vendors have every incentive to keep clients happy, lest they jeopardize contract renewals and recurring income. Expect to be kept abreast of new services and features.